2024 (2) TMI 789 - AT - Income Tax

Penalty u/s 271D - accepting cash loan of Rs. 2 lakh in aggregate without any reasonable cause in contravention to section 269SS - transactions between father and son - HELD THAT - No cogent reasons have been assigned either by the Ld. Addl. CIT and / or the Ld. CIT(A) to reject the assessee s explanation. It is not disputed that the transaction took place between the assessee and his son, both carrying on their independent business. Confirmed copies of account of the assessee in the books of concern of his son and vice versa were brought on record. Genuineness of transaction has not been doubted. All the transactions were accounted for by the assessee and his son in their respective books of account. The impugned transaction is reportedly to meet business exigency. We are therefore of the opinion that the assessee established the existence of reasonable cause for the impugned transaction and therefore the penalty is not exigible. Decided in favour of assessee.

Summary

Issues involved: Appeal against penalty imposed under section 271D of the Income Tax Act, 1961 for accepting cash loan without reasonable cause.

Summary:
The appeal was filed against the penalty imposed by the Ld. Addl. CIT under section 271D of the Income Tax Act, 1961 for accepting a cash loan of Rs. 2,00,000 without any reasonable cause. The assessee had filed the return declaring income for the relevant assessment year. The penalty proceedings were initiated by the Ld. AO, and the penalty was confirmed by the Ld. Addl. CIT, which led to the appeal before the Tribunal.

The assessee claimed that the cash loan was taken from his son to meet an urgent need due to a lack of funds in the business. The assessee believed that the transactions did not violate the provisions of section 269SS of the Act. The explanation provided by the assessee was supported by the accounts of both parties involved in the transaction.

The Department argued that the assessee failed to demonstrate any urgency to take the cash loan. However, the Tribunal considered the submissions and records. It noted that the transaction was between the assessee and his son, both engaged in independent businesses. The genuineness of the transaction was not in doubt, and all transactions were accounted for in their respective books. The Tribunal found that the assessee had established a reasonable cause for the transaction, leading to the decision to vacate the penalty.

Ultimately, the Tribunal allowed the appeal of the assessee, and the penalty was set aside. The order was pronounced in the open court on 14th February 2024.